Bayleys news & articles

Rural Insight: Dairy goat opportunities on offer

Monday, 14 November 2016

Tags: RuralRural Insight

The threads of dairying are becoming more varied as farmers look to non-cow options for farm milking platforms around the country.

Just as dairy and sheep are receiving more attention, milking goats have been building on a well-established platform of production as global market demand for the high value dairy products continues to exceed supply.

Globally dairy goat products have been one of the rising stars in high value niche products, experiencing strong and ongoing growth. Intolerance to cow’s milk can be a common problem in some markets and goat milk provides a high protein, high calcium alternative.

Bayleys country manager Simon Anderson said there were a lot of positives that lent themselves to goat farming, if a willing processor can be secured.

“There are both environmental and market positives that go with this land use at present.

With milk solids valued at about $18 a kg, and with costs of about $8 a kg, there is a good return there. The fact it can be generated off a property about an eighth the size of an average dairy farm does make it an appealing option for farmers wanting to get a foot hold in farm ownership.”

Bayleys Waikato rural consultant Mike Fraser-Jones is marketing two larger goat operations that are attracting interest from both existing farmers and investors considering other dairy options.

“Some of the interest we are seeing has come about from the lower dairy payout, and the solid market foundations the New Zealand Dairy Goat Co-operative has established for goat milk products. It has been a very niche focused, demand led development,” he says.

One of the properties being marketed is described as a “Rolls Royce” unit.

Hangawera Valley Goats located near Morrinsville comprises 41ha and includes 100,000 NZ Dairy Goat Co-operative Shares, milking 600 goats and producing 107,711kg of milksolids. The property is on the market as a fully integrated package.

It comes after two properties sold in the past year in Taranaki and Cambridge as the sector experiences a period of growth in supply to the co-operative.

Mike Fraser-Jones says capital costs for goat operations can be high, but need to be held against the strong per hectare returns the operation can generate off a relatively small footprint.

“And you also need to allow for having good staff on a goat operation, they are not always the easiest to find in what is still a relatively small industry,” he says.

The Waikato has long been a stronghold for dairy goats thanks to the ground breaking work of the low profile Dairy Goat Co-operative. The co-operative expanded its supplier base considerably between 2013 and 2015, taking on an additional 24 farm suppliers.

More recently the Manawatu has also become home to hundreds of dairy goats.

Six farms in the province now supply the Ashburton based dairy goat processor NZ Dairy Collaborative Group (NZDCG). Once the goats have been milked in the Manawatu, the raw product is trucked to Hamilton for drying at a specialist plant at Ruakura then packaged in Ashburton.

NZDCG spokesman Solomon Ling said after only little over a year in New Zealand the company was on a sound footing, having security of supply from the Manawatu herds, and the capacity to dry the milk in Hamilton.

The company’s major shareholder FineBoon is China’s major infant formula goat milk powder brand owner. However the major markets for the powdered product include Arab states where it is accepted as a preferred infant formula option due to the product’s easily digested formulation.

At this stage the company is taking a low profile to its growth, ensuring markets are well established and capable of earning a premium, rather than risking significant volume growth that erodes potential margins. In the future its plans include a joint venture drier operation.

“Until that point we are not seeking any more suppliers.”

Other regions are also eyeing the potential dairy goats may bring as an environmentally friendly, high value land use option for pastoral country.

Last year a report by Business Hawke’s Bay indicated the region’s dry, low humidity climate was well suited to goat farming, while the land’s good contour would lend itself well to an industry capable of creating 178 new jobs and bring $1.5 billion into the region.

As environmental demands on conventional dairying increase, the prospect of housing cows for at least part of the year may have to be considered for containing nutrient losses.

“With more farmers having to consider housing cows, housing goats may appear more affordable and manageable,” says Simon Anderson.